Is this practice of doctors bearing financial risk spreading? How likely is it
that doctors in your area take part in such a system?

A short, accessible explanation of "capitation"and other methods of paying
physicians whereby their incomes are directly affected by their treatment
decisions. Hagland addresses what the new medical economics means for patients
and doctors, and where the troubled system may be headed.

A compelling article from the American Prospect which traces the "epic
reversal" of the principle which guided American medicine for more than 150
years: the practice of medicine should be untainted by financial
considerations. Today, however, the principles of Hippocrates are clashing
with those of Adam Smith. Reporter Deborah Stone examines this cultural
revolution and its impact on doctoring.

Medical economist J.D. Kleimke defends capitation. He argues that it's
appropriate for some financial risk to fall on doctors because they're in the
best position to control spiraling costs. And that it's the best approach for
cutting costs while maintaining quality care.

Linking physicians' compensation directly to the level or type of care they
provide obviously raises ethical concerns--doctors may find it hard to separate
treatment decisions for a particular patient from broader budgetary concerns.
Both systems of capitation, which arguably encourage doctors to undertreat, and
fee-for-service payment systems, which may encourage overtreatment, can create
conflicts of interest. In December 1997, the American Medical Association
issued these ethical recommendations for avoiding or addressing possible
conflicts.

This essay from the New England Journal of Medicine proposes a set of
principles by which to achieve more cost-conscious and effective care without
jeopardizing the integrity of physicians' decisions regarding care for
individual patients. Despite the conflicts of interest that can arise under
capitation, the authors believe that it is possible to negotiate "morally
acceptable" contracts.

The world of managed care and health care finance has its own sometimes
complicated terminology. This glossary, from the Alliance for Health Reform, is
a helpful guide.